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Networkers International plc - Litigation update

Networkers International plc - Litigation update


During 2006, three individuals filed a complaint for unspecified damages against a separate limited liability company operating overseas, managed by the Group, alleging that they were improperly classified as independent contractors rather than employees and are due additional payments for violations of wage and hour laws including those governing overtime pay, rest breaks, and meal breaks principally during the period 2005 and 2006. Details of this complaint were set out in the admission document published by the Company in 2006 and in subsequent annual reports and the 2012 interim statement.

The claim was styled as a class action but the trial court ruled in favour of the company and denied class certification in 2007. The court of appeal affirmed the denial of class certification in 2009. The case was then put on hold pending the outcome of a lead case that was heard this year. The case was then referred back to the court of appeal to consider in light of the lead case outcome.


The board of the Company (the "Board"), based on legal advice, continues to believe that the company has a strong defence to all claims. However, on 12 December 2012, the California court of appeal overturned its original favourable decision and ruled that certain limbs of the claim could be certified as a class action. The company is considering whether or not to pursue an appeal in respect of this decision.

This recent ruling did not consider the merits of the case which will only be considered if the case proceeds to trial. Should the case proceed to trial, it is likely to be heard during 2015.

Notwithstanding that the Board continues to believe, based on legal advice, that the overseas company has a strong defence to all claims, it considers it prudent to make a further exceptional provision of &pound1.0 million in the full year accounts for the year ending 31 December 2012, in addition to the &pound0.6m already provided. The Board believes that these provisions will cover all likely eventualities.

Trading update

The Company will release a pre-close trading update in respect of the year ending 31 December 2012 during the week commencing 14 January 2013.


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